[GNC] help setting accounts to track contributions

[GNC] help setting accounts to track contributions

Hi,

My partner and I are moving in together and we'd like to share expenses
like groceries, rent, etc. So we'd like to track expenses as well as our
appropriate contributions to make sure that we both are contributing
equally to house expenses.

How should I set up the contribution? Under what main account type should
it be? Any recommendations?

Re: [GNC] help setting accounts to track contributions

On Friday, 4 May 2018 09:13:57 BST Gio Bacareza wrote:
> Hi,
>
> My partner and I are moving in together and we'd like to share expenses
> like groceries, rent, etc. So we'd like to track expenses as well as our
> appropriate contributions to make sure that we both are contributing
> equally to house expenses.
>
> How should I set up the contribution? Under what main account type should
> it be? Any recommendations?

I'd suggest a datafile for you and a separate one for the "joint accounts"

record contributions into the joint accounts as income (possibly with sub
accounts like Income:Contribution:Gio) and bill paid in the usual way as
Expenses:Electricity and so on.

Re: [GNC] help setting accounts to track contributions

> On Friday, 4 May 2018 09:13:57 BST Gio Bacareza wrote:
> > Hi,
> >
> > My partner and I are moving in together and we'd like to share expenses
> > like groceries, rent, etc. So we'd like to track expenses as well as our
> > appropriate contributions to make sure that we both are contributing
> > equally to house expenses.
> >
> > How should I set up the contribution? Under what main account type should
> > it be? Any recommendations?
>
> I'd suggest a datafile for you and a separate one for the "joint accounts"
>
> record contributions into the joint accounts as income (possibly with sub
> accounts like Income:Contribution:Gio) and bill paid in the usual way as
> Expenses:Electricity and so on.
>
> 0.02
> Maf.
>
>
>

Re: [GNC] help setting accounts to track contributions

> Hi,
>
> My partner and I are moving in together and we'd like to share expenses
> like groceries, rent, etc. So we'd like to track expenses as well as our
> appropriate contributions to make sure that we both are contributing
> equally to house expenses.
>
> How should I set up the contribution? Under what main account type should
> it be? Any recommendations?
>

I am going to suggest something more straight forward than treating
contributions as "income", less distorting to what the situation is.
Imagine that this were an ordinary (business) partnership, income,
expenses, and partner's "drawings" or "contributions" (partner's drawing
accounts are under equity, representing each partner's investment in the
enterprise). In other words, you can look in a standard accounting text
under "accounting for partnerships".

OK, this is a special sort of partnership that only has expenses, no
income. So the drawing account of each partner will only show
contributions. Going to be very easy to see if the total contributions
are equal or not.

In other words, a funny set of books, in effect just "expenses" and
"equity" trees with meaningful content. You can leave the top level
parents "assets", "income", and "liabilities" in there, but usually
these would have no contents. Or perhaps because of how you run your
household, they might. For example, could be a "cookie jar" for small
amounts of cash held on hand, so something under assets. Or there might
be a situation where one partner pays a large bill but that partner's
contributions are already higher. So treat that as a loan to the
partnership and now something under "liabilities"

Michael D Novack

--
There is no possibility of social justice on a dead planet except the equality of the grave.

Re: [GNC] help setting accounts to track contributions

> Hi,
>
> My partner and I are moving in together and we'd like to share expenses
> like groceries, rent, etc. So we'd like to track expenses as well as our
> appropriate contributions to make sure that we both are contributing
> equally to house expenses.
>
> How should I set up the contribution? Under what main account type should
> it be? Any recommendations?
>
>

I'm in a similar situation. I have a file for my own accounts and one for
joint finances with my partner.

In the joint books, I track our individual contributions as income (to the
household), and everything else just as you would normally. In my personal
books, my contribution to the household is an expense.
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Re: [GNC] help setting accounts to track contributions

> On 5/4/2018 4:13 AM, Gio Bacareza wrote:
>
>> Hi,
>>
>> My partner and I are moving in together and we'd like to share expenses
>> like groceries, rent, etc. So we'd like to track expenses as well as our
>> appropriate contributions to make sure that we both are contributing
>> equally to house expenses.
>>
>> How should I set up the contribution? Under what main account type should
>> it be? Any recommendations?
>>
>> I am going to suggest something more straight forward than treating
> contributions as "income", less distorting to what the situation is.
> Imagine that this were an ordinary (business) partnership, income,
> expenses, and partner's "drawings" or "contributions" (partner's drawing
> accounts are under equity, representing each partner's investment in the
> enterprise). In other words, you can look in a standard accounting text
> under "accounting for partnerships".
>

This doesn't sound straightforward at all. What's complicated about
treating joint contributions to the household coffers as "income" to the
household? Treating that income as ever-increasing equity would confuse
P&L and cashflow calculations, wouldn't it?

> OK, this is a special sort of partnership that only has expenses, no
> income. So the drawing account of each partner will only show
> contributions. Going to be very easy to see if the total contributions are
> equal or not.
>
> In other words, a funny set of books, in effect just "expenses" and
> "equity" trees with meaningful content. You can leave the top level parents
> "assets", "income", and "liabilities" in there, but usually these would
> have no contents. Or perhaps because of how you run your household, they
> might. For example, could be a "cookie jar" for small amounts of cash held
> on hand, so something under assets. Or there might be a situation where one
> partner pays a large bill but that partner's contributions are already
> higher. So treat that as a loan to the partnership and now something under
> "liabilities"
>

It seems to me that a household is just as likely to have liabilities and
assets. In our case, there are credit cards, the mortgage, and the house.
There might also be a car, or any number of other assets jointly owned.
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Re: [GNC] help setting accounts to track contributions

It will lead to disharmony and discord because no matter how hard you
try there is never true "equality" in any relationship. Instead, live,
love, enjoy and support each other. Do things together and don't worry
about who's wallet it comes from. Do something every day to show your
partner how much you appreciate the fact they are in your life, and
don't expect them to pay half.

At the end of your life where the money came from won't be important,
but if you make it important now it will kill the relationship.

If you insist on doing this, then stick to the major fixed expenses like
rent/mortgage and insurance. And then, prepare to be flexible on these
targets because life will intervene and there will be times when you or
your partner will not be able to meet them, and trying to reduce these
events to a spreadsheet or financial program will only make bad
situations more toxic.

Sure, your partner needs to contribute to the other, variable expenses.
And you need to talk about it if you don't feel they are doing their
part. This will be a continuing and recurring process. But if you start
trying to reduce those things to a fixed mathematical construct then you
will find yourself on the road to frustration.

I will give you just one example: Grocery budget. Sure, you can set a
figure and stipulate that each partner pays 50% (or a percentage based
upon respective incomes...but on that path lies madness). But what if
you eat 7 eggs out of the dozen? Or your partner drinks three glasses
of wine to your one? Do you then go back and recalculate the value of
"contributing equally"? What if your tracking of these things has
greater granularity than your partner's?

If you insist on reducing every household expenditure to a set
distribution pattern your partnership becomes a business. Is that what
you want out of a personal relationship?

RBM

On 05/04/2018 02:13 AM, Gio Bacareza wrote:

> Hi,
>
> My partner and I are moving in together and we'd like to share expenses
> like groceries, rent, etc. So we'd like to track expenses as well as our
> appropriate contributions to make sure that we both are contributing
> equally to house expenses.
>
> How should I set up the contribution? Under what main account type should
> it be? Any recommendations?
>

Re: [GNC] help setting accounts to track contributions

On 05/04/2018 08:24 AM, Matthew Pounsett wrote:
> This doesn't sound straightforward at all. What's complicated about
> treating joint contributions to the household coffers as "income" to the
> household? Treating that income as ever-increasing equity would confuse
> P&L and cashflow calculations, wouldn't it?

I believe what he is talking about as straightforward is fewer entries.
IOW, instead of showing an entry from equity to income, you are showing
an entry from equity straight to expenses. That eliminates an entry that
would otherwise be made. One's P&L would look a little funky (only
showing expenses), but this isn't a business as such that has income
other than from the "partners". So actually, it would be more accurate.
For instance, think of it as what an accountant I used to work for did.
For personal expenses that were drawn on the company, she had a separate
set of "books" in equity under draws for their varied personal expenses.
Reverse that, and you have money being contributed by a partner going to
pay bills. Same thing. So it makes sense from that perspective.

The only advantage I can see to entering from equity to income, and then
paying the bills is that you can get the whole thing on one report which
would make it clear who is paying what, but only for a specific period
of time. That said, it would be just as easy to look in equity and see
who is behind and who is ahead to decide who pays the next bill. That
has the advantage of not having to worry about running a P&L for that
purpose at all, other than to see what your expenses were for a specific
period of time, or being force to run a P&L for the time of the whole
file to see that information. Easier to look at the chart of accounts to
see the whole picture of who is ahead or not.

For instance, let's say you had to pay a bill for electricity of
$200.00. It would be one simple entry to record it:

You'll get a nicer P&L, but I don't know how valuable that is in this
situation. It sounds to me like they mainly want to record expenses and
have an easy way to make sure they are paying an equal share. Either
method would accomplish that, but the former method has less data entry
to accomplish that. We'll leave it up to them which route they want to take.

Re: [GNC] help setting accounts to track contributions

>
> This doesn't sound straightforward at all. What's complicated about
> treating joint contributions to the household coffers as "income" to
> the household? Treating that income as ever-increasing equity would
> confuse P&L and cashflow calculations, wouldn't it?

AS DESCRIBED this apartment/house partnership has no income. The P&L
report not so strange if you consider some of the alternative names for
this report that not or profit entities use. Thus "Income and Expenses"
except that as described, no income.

BUT --- there COULD be income. Let's say that this were a house or large
apartment, and in addition to the partners living there and sharing
expenses they sometimes rented out a room to a non-partner. THAT would
be income to the partnership.

BTW -- there might be other, actual business partnerships, even ones
intended to make a profit, that initially and perhaps for some time
would have no income. Imagine a partnership that came together for the
purpose of buying some real estate with currently un-inhabitable
buildings, fixing this up, and later selling it for a profit. Could be a
project that took a couple of years to complete. Do you not see that
pretty much until the end there would be no income?

This doesn't sound straightforward at all. What's complicated about
treating joint contributions to the household coffers as "income" to
the household? Treating that income as ever-increasing equity would
confuse P&L and cashflow calculations, wouldn't it?

AS DESCRIBED this apartment/house partnership has no income. The P&L
report not so strange if you consider some of the alternative names
for this report that not or profit entities use. Thus "Income and
Expenses" except that as described, no income.
BUT --- there COULD be income. Let's say that this were a house or
large apartment, and in addition to the partners living there and
sharing expenses they sometimes rented out a room to a non-partner.
THAT would be income to the partnership.
BTW -- there might be other, actual business partnerships, even ones
intended to make a profit, that initially and perhaps for some time
would have no income. Imagine a partnership that came together for
the purpose of buying some real estate with currently un-inhabitable
buildings, fixing this up, and later selling it for a profit. Could
be a project that took a couple of years to complete. Do you not see
that pretty much until the end there would be no income?
Michael D Novack
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